The UK antitrust watchdog has said Google has “abused its dominant position” in online advertising to favour its own services, amounting to another blow for the embattled tech giant days before a parallel lawsuit starts in the US.
The Competition and Markets Authority (CMA) said on Friday that an investigation has provisionally found that Google is using anticompetitive practices in display ad tech. It believes these could be harming thousands of UK publishers and advertisers by overcharging them, as well as suppressing any potential competitors by rigging online ad-bidding marketplaces.
“Google is using its market power to hinder competition when it comes to the ads people see on websites,” said Juliette Enser, CMA interim executive director of enforcement.
“Many businesses are able to keep their digital content free or cheaper by using online advertising to generate revenue,” she added. “That’s why it’s so important that publishers and advertisers can benefit from effective competition and get a fair deal when buying or selling digital advertising space.”
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The CMA’s findings come as Alphabet, the parent company of Google, faces the biggest threat to its business model in its 26-year history. On Monday, the company will face the US Department of Justice in a Virginia court over similar allegations that it exerts monopolistic control over digital advertising.
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Last month it lost a landmark US antitrust lawsuit brought against its core search business that branded it a “monopolist”. The remedies could mean it will have to spin off or open up parts of its sprawling online empire.
In December, Google lost another case brought by Epic Games that accused it of shutting out rivals from its Android app Play Store to generate billions of dollars of extra profit by charging excessive fees.
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The CMA is concerned that Google is using its dominant position in two sides of the market – publisher ad servers and advertiser buying tools – to manufacture an unfair advantage for its ad exchange over rivals.
Google’s ad exchange, called ADX, is accused of providing “exclusive or preferential access to advertisers that use Google Ads’ platform” and then “manipulating advertiser bids so that they have a higher value when submitted into ADX’s auction than when submitted into rival exchanges”, according to the CMA’s statement of objections.
Furthermore, Google is alleged to be “allowing ADX to bid first in auctions... for online advertising space, effectively giving it a ‘right of first refusal’ – with rivals potentially not having any chance to submit bids”.
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The CMA said it is considering what may be required to ensure that Google ceases anticompetitive practices and will make a final decision after representations from Google.
“The core of this case rests on flawed interpretations of the ad tech sector,” said Dan Taylor, Google’s vice-president of global ads. “We disagree with the CMA’s view and we will respond accordingly.”
The CMA cited a 2019 market study into digital advertising, which found that advertisers were spending about £1.8 billion (€2.13 billion) annually on open-display ads, marketing goods and services via apps and websites to UK consumers. – Copyright The Financial Times Limited 2024
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